# Economics Foreign Set 2 2013-2014 CBSE (Arts) Class 12 Question Paper Solution

Economics [Foreign Set 2]
Date: March 2014

[1]1

What is meant by collusive oligopoly?

Concept: Main Market Forms
Chapter: [0.024] Forms of Market and Price Determination
[1]2

Define production function.

Concept: Meaning of Production Function
Chapter: [0.023] Producer Behaviour and Supply
[1]3

What is supply?

Concept: Concept of Supply
Chapter: [0.023] Producer Behaviour and Supply
[1]4

A large number of technical training institutions have been started by the government. State its economic value in the context of production possibilities frontier.

Concept: Concepts of Production Possibility Frontier
Chapter: [0.021] Introduction
[1]5

When is demand called perfectly inelastic?

Concept: Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[3]6 | Attempt Any One
[3]6.1

How does change in per unit tax influence the supply of a good by a firm? Explain.

Concept: Supply Curve and Schedule
Chapter: [0.023] Producer Behaviour and Supply
[3]6.2

How does subsidy influence the supply of a good by a firm? Explain.

Concept: Supply Curve and Schedule
Chapter: [0.023] Producer Behaviour and Supply
[3]7

Why is a production possibilities curve downward sloping? Explain

Concept: Concept of Production
Chapter: [0.023] Producer Behaviour and Supply
[3]8

Price elasticity of demand of a good is (-) 1. Calculate the percentage change in price that will raise the demand from 20 units to 30 units.

Concept: Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[3]9

Explain the implications of the following in a perfectly competitive market:

Concept: Main Market Forms
Chapter: [0.024] Forms of Market and Price Determination
[3]10

Under what market condition does Average Revenue always equal Marginal Revenue? Explain.

Concept: Features of Perfect Competition
Chapter: [0.024] Forms of Market and Price Determination
[4]11 | Attempt Any One
[4]11.1

State the different phases of change in the total product according to the Law of Variable Proportions. Use diagram

Concept: Law of Variable Proportions
Chapter: [0.023] Producer Behaviour and Supply
[4]11.2

State the behaviour of marginal product in the law of variable proportions. Explain the causes of this behaviour

Concept: Law of Variable Proportions
Chapter: [0.023] Producer Behaviour and Supply
[4]12 | Attempt Any One
[4]12.1

A consumer consumes only two goods. Explain consumer's equilibrium with the help of utility analysis.

Concept: Conditions of Consumer's Equilibrium Using Marginal Utility Analysis
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4]12.2

A consumer consumes only two goods X and Y and is in equilibrium. Show that when the price of good X falls, demand for good X rises. Use Utility Analysis.

Concept: Cardinal Approach (Utility Analysis)
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4]13

Distinguish between demand by an individual consumer and market demand of a good

Concept: Market Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand

State the factors leading to fall in demand by an individual consumer

Concept: Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6]14

What is meant by 'excess supply' of a good in a market?

Concept: Market Equilibrium
Chapter: [0.024] Forms of Market and Price Determination

Explain its chain of effects on the market of that good. Use diagram

Concept: Market Equilibrium
Chapter: [0.024] Forms of Market and Price Determination
[6]15 | Attempt Any One
[6]15.1

Explain the conditions of consumer’s equilibrium using indifference curve analysis.

Concept: Indifference Curve
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6]15.2

Explain the three properties of the indifference curves.

Concept: Indifference Curve
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6]16

From the following information about a firm, find the firm's equilibrium output in terms of marginal cost and marginal revenue. Give reasons. Also, find profit at this output.

 Output (units) Total Revenue(Rs) Total Cost (Rs) 1 8 10 2 16 18 3 24 23 4 32 31 5 40 41
Concept: Cost - Marginal Cost
Chapter: [0.023] Producer Behaviour and Supply
[1]17

Define aggregate supply?

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[1]18

What is 'devaluation'?

Concept: Concept of Foreign Exchange Rate
Chapter: [0.015] Balance of Payments
[1]19

What is a central bank?

Concept: Definition - Central Bank
Chapter: [0.013999999999999999] Money and Banking
[1]20

What is 'excess demand' in macroeconomics?

Concept: Meaning of Micro and Macro Economics
Chapter: [0.021] Introduction
[1]21

What is primary deficit?

Concept: Deficit Budget - Primary Deficit
Chapter: [0.016] Government Budget and the Economy
[3]22 | Attempt Any One
[3]22.1

Explain the 'standard of deferred payment' function of money. How has it solved the related problem created by barter?

Concept: Standard of Deferred Payment
Chapter: [0.013999999999999999] Money and Banking
[3]22.2

Explain the ‘store of value’ function of money. How has solved the related problem created by barter?

Concept: Money - Store of Value
Chapter: [0.013999999999999999] Money and Banking
[3]23

How is balance of payment 'deficit' measured? Explain.

Concept: Concept of Balance of Payments Account
Chapter: [0.015] Balance of Payments
[3]24

What is 'appreciation' of domestic currency? What is its likely effect on exports and how?

Concept: Concept of Foreign Exchange Rate
Chapter: [0.015] Balance of Payments
[3]25

What are non-monetary exchanges? Give an example. Explain their impact on the use of a gross domestic product as an index of the welfare of the people.

Concept: Systems of Exchange Rates
Chapter: [0.015] Balance of Payments
[3]26

Giving reason, state whether the following is a revenue expenditure or a capital expenditure in a government budget:

Expenditure on scholarships

Concept: Classification of Expenditure
Chapter: [0.016] Government Budget and the Economy

Giving reason, state whether the following is a revenue expenditure or a capital expenditure in a government budget:

Expenditure of building a bridge.

Concept: Classification of Expenditure
Chapter: [0.016] Government Budget and the Economy
[4]27

The government has started spending more on providing free services like education and health to the poor. Explain the economic value it reflects.

Concept: Classification of Expenditure
Chapter: [0.016] Government Budget and the Economy
[4]28 | Attempt Any One
[4]28.1

State the meaning and components of the money supply.

Concept: Meaning of Supply of Money
Chapter: [0.013999999999999999] Money and Banking
[4]28.2

Explain the 'currency authority' function of a central bank.

Concept: Central Bank Function - Controller of Credit
Chapter: [0.013999999999999999] Money and Banking
[4]29

Calculate 'Marginal Propensity to Consume' from the following data about an economy which is in equilibrium:
National income = 800
Autonomous consumption expenditure = 100
Investment expenditure = 100

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates
[6]30 | Attempt Any One
[6]30.1

Explain national income determination through the two alternative approaches. Use Diagram.

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates
[6]30.2

Given consumption curve, derive saving curve and state the steps taken in the process of derivation. Use Diagram.

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[6]31

Calculate 'National Income' and 'Gross National Disposable Income' from the following:

 (Rs in Arab) 1 Net imports 60 2 Net current transfers to abroad (-)10 3 Net domestic fixed capital formation 300 4 Government final consumption expenditure 200 5 Private final consumption expenditure 700 6 Consumption of fixed capital 70 7 Net change in stocks 30 8 Net factor income to abroad 20 9 Net indirect tax 100
Concept: Aggregates Related to National Income - Gross National Product (GNP)
Chapter: [0.012] National Income and Related Aggregates
[6]32

How should the following be treated while estimating national income? You must give the reason in support of your answer.

Bonus paid to employees

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates

How should the following be treated while estimating national income? You must give the reason in support of your answer.

Addition to stocks during a year

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates

How should the following be treated while estimating national income? You must give the reason in support of your answer.

Purchase of taxi by a taxi driver.

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates

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